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OPE: No Greater Leverage

Photo courtesy of iStockphoto/E_Y_E

If you study financial success books on investments, you will likely come across the terminology “OPM.” It stands for other people’s money. The idea is to start with nothing, but use other people’s money to become fabulously wealthy. Widely used in the real estate world, this concept of financial leverage and OPM is often hyped on infomercials.

How does it work?

You want to buy a rental property, but you don’t have the money. You put down a small amount and finance the rest from the bank. Let’s say you buy a house for $100,000, but you only put down $5,000. When the price goes up to $150,000 and you sell the house, in addition to the rental income you earned, you pocket $50,000. In simple terms, the magic of OPM is that you made $50,000, but you only used $5,000 of your own money (if anything at all!). That’s an extraordinary return on your investment. Obviously, given the housing downturn, many people are realizing that the $100,000 home doesn’t necessarily become $150,000 and could end up at $50,000. That has been a painful lesson to many, but the OPM concept is still a valid approach.

My entire life has been spent studying a different type of leverage—one leveraging not other people’s money, but something much more valuable. And its value is always there and cannot go down. In fact, the more it is used, the more it goes up in value.

What is it?

OPE: other people’s experience. Whether it is an audio recording, a sermon, a book or a conversation, I am constantly taking in information that I can use from what someone else has lived through. When I was a kid, I would ask a lot of questions and that only increased as I started my own career. “Why did you decide to be an engineer?” “How did you go from nursing to marketing?” “What lessons did you learn about money in the Great Depression?” “What inspired you to start this business?” “Tell me how you became a manager.” “How did you become financially independent?”

Key questions: Do you personally have to experience the agony of a mistake in order to learn its lesson? Is it possible to study someone else’s success and duplicate it?

It may be that to truly experience something, you have to go through it yourself. But, it is also true that if you ask the right questions, you can come really close. A great movie or a great book can take you places. I may never fight a war or visit Vietnam, but when I read Matterhorn or watched Platoon, I felt like I got a glimpse of what it was like.

This blog is my opportunity to share some of the experiences of others with you to take advantage of OPE. It is a powerful secret to success. It’s faster and easier to take the shortcut: OPE.

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Disclosure of Material Connection: I received one or more of the products or services mentioned above for free in the hope that I would mention it on my blog. Also, some of the links in the post above may be “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”